TABLE OF CONTENTS
Acknowledgments
Introduction - Michael D. Bordo, Alan M. Taylor, Jeffrey G. Williamson
DOI: 10.7208/chicago/9780226065991.003.0001
[globalization, force, economists]
Modern globalization has been a recognized force around the world for at least three decades. Academic journals, newspapers, television specials, and political discourse are dominated by globalization events, and their impact seems to be ubiquitous. For most it is a good force, but for a very angry minority it appears to be a bad one. This introductory chapter begins with a discussion of the meaning of the term globalization, and what is included in economists' agenda when they debate globalization issues. An overview of the subsequent chapters is then presented. (pages 1 - 10)
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I. The Rise and Fall (and Rise) of Market Integration
Commodity Market Integration, 1500–2000 - Ronald Findlay, Kevin H. O'Rourke
DOI: 10.7208/chicago/9780226065991.003.0002
[international commodity market, world trade, intercontinental trade, Napoleonic Wars]
This chapter provides an introduction to what is known about trends in international commodity market integration during the second half of the second millennium. Throughout, the focus is on intercontinental trade, since it is the emergence of large-scale trade between the continents that has especially distinguished the centuries following the voyages of da Gama and Columbus. The chapter is organized as follows. Section 1.2 discusses world trade before 1500. Section 1.3 covers world trade from 1500–1780. Section 1.4 focuses on the impact of the French and Napoleonic Wars on trade. Sections 1.5 and 1.6 discuss world trade from 1815–1914 and 1914–2000, respectively, while Section 1.7 concludes. A commentary is also included at the end of the chapter. (pages 13 - 62)
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International Migration and the Integration of Labor Markets - Barry R. Chiswick, Timothy J. Hatton
DOI: 10.7208/chicago/9780226065991.003.0003
[globalization, world markets, mass migration, labor mobility, international economy, policy regimes]
This chapter illustrates that the globalization of world markets has been of prime economic importance in two key eras: the age of mass migration, which rose to a crescendo between 1850 and 1913; and the era of “constrained” mass migration of the last fifty years. The focus is on intercontinental migrations: from Europe to the New World and from parts of Asia to other areas around the globe in the late nineteenth and early twentieth centuries, and primarily from the third world to the first world and the Persian Gulf in the late twentieth century. The chapter begins by mapping out the different eras of international migration and labor mobility over the last four centuries, and then examines the underlying forces that drove mass migration in the two eras of globalization. Next, it considers the effects of migration on sending and receiving countries, and the impact of these economic effects on what has been dubbed the “policy backlash.” Although the fundamentals driving international migration were similar in the two periods, the nature, direction, and consequences of the flows reflect changes in the structure and integration of the international economy. The effects of international migration are conditioned both by structural changes in the world economy and by changes in policy regimes. In turn, the policy regimes have evolved in response to changing economic structures, political developments, and migration itself. The chapter concludes with an overview of migration flows and policy in the past, and with speculation about the future. A commentary is also included at the end of the chapter. (pages 65 - 117)
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Globalization and Capital Markets - Maurice Obstfeld, Alan M. Taylor
DOI: 10.7208/chicago/9780226065991.003.0004
[international capital mobility, nineteenth century, open-economy trilemma, exchange rates]
This chapter surveys the development of international capital mobility since the mid-nineteenth century. It documents the long U traced out by the creation of a well-integrated global capital market by 1914, its collapse during the interwar years, and its resurrection since 1970. This description is enhanced by reference to the open-economy “trilemma” faced by policymakers when choosing between capital markets, domestic monetary targets, and exchange rate regimes. The chapter examines a wide array of new evidence, including data on gross asset stocks, interest rate arbitrage, real interest differentials, and equity-return differentials. On all measures examined, the degree of international capital mobility appears to follow this U pattern, being high before World War I, low in the Great Depression, and high today. A commentary is also included at the end of the chapter. (pages 121 - 183)
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II. The Great Divergence, Geography, and Technology
Globalization and Convergence - Steve Dowrick, J. Bradford Delong
DOI: 10.7208/chicago/9780226065991.003.0005
[geographic patterns, globalization, world economy, convergence]
This chapter discusses geographic patterns and correlations between measures of globalization and the power of forces making for convergence. It presents four tentative theses about the extent of convergence and the relationship of convergence to globalization: (1) The first era of globalization—the knitting together of the world economy into a single unit in which staples could be profitably traded across oceans in the years before World War I—was essential in spreading the possibility of convergence beyond the narrow North Atlantic. (2) Outside the charmed circle made up of the western European economies plus the temperate economies of European settlement, the first era of globalization in 1870–1914 did not bring convergence. (3) During the interwar era of globalization retreat, there were signs that the world's convergence club was significantly expanding. (4) The post-World War II period has brought an expansion in the size but also a shift in the location of the world's convergence club. A commentary is also included at the end of the chapter. (pages 191 - 220)
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Does Globalization Make the World More Unequal? - Peter H. Lindert, Jeffrey G. Williamson
DOI: 10.7208/chicago/9780226065991.003.0006
[globalization, world inequality, income gaps]
This chapter examines the impact of globalization on world inequality. It explores four dimensions: the components of world inequality, the sources of globalization, the degree to which individual nations actually globalized, and the historical time period. The chapter suggests that globalization may have mitigated the steep rise in income gaps between nations. The nations that gained the most from globalization are those poor ones that changed their policies to exploit it, whereas the ones that gained the least did not. The effect of globalization on inequality within nations has gone both ways, and not according to any simple correlation between the observed trends, or, for that matter, according to any simple theory. A commentary is also included at the end of the chapter. (pages 227 - 271)
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Technology in the Great Divergence - Gregory Clark, Robert C. Feenstra
DOI: 10.7208/chicago/9780226065991.003.0007
[per capita income, productivity, income inequality, efficiency, total factor productivity, trade, poor economies]
This chapter examines the changes in per capita income and productivity from 1800 to modern times. It demonstrates the following: (1) There has been increasing inequality in incomes per capita across countries since 1800 despite substantial improvements in the mobility of goods, capital, and technology. (2) The source of this divergence was increasing differences in the efficiency or total factor productivity of economies. (3) These differences in efficiency were not due to the inability of poor countries to get access to the new technologies of the Industrial Revolution. Instead, differences in the efficiency of use of new technologies explain both low levels of income in poor countries and the slow adoption of Western technology. (4) The pattern of trade from the late nineteenth century between the poor and the rich economies should in principle reveal whether the problem of the poor economies was peculiarly a problem of employing labor effectively. A commentary is also included at the end of the chapter. (pages 277 - 322)
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Globalization in History - Nicholas Crafts, Anthony J. Venables
DOI: 10.7208/chicago/9780226065991.003.0008
[divergence, world economy, economic geography, economic history]
This chapter analyzes the historical experience of globalization, first sketching out some of the facts about the changing location of activity and the way that spatial interactions between economic agents changed over time. Second, it outlines theoretical approaches to thinking about the consequences of these changes, and third, looks in more detail at several historical episodes. From the nineteenth century, the chapter focuses on the rise of New World economies and the development of urbanization. It confronts the central issue of early twentieth-century economic history, namely how the United States came to overtake other regions, and argues that insights from new economic geography can shed important light on this change. A commentary is also included at the end of the chapter. (pages 323 - 370)
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III. Financial Institutions, Regimes, and Crises
Financial Systems, Economic Growth, and Globalization - Peter L. Rousseau, Richard Sylla
DOI: 10.7208/chicago/9780226065991.003.0009
[financial development, domestic growth, financial market integration, financial system]
This chapter, which explores the links between domestic financial development, domestic growth, and international financial market integration, begins with a discussion of the meaning of a good or well-functioning financial system. Next, it develops several historical case studies of countries that built such systems early in their modern economic histories: the Netherlands, Great Britain, the United States, France, Germany, and Japan. For each case, the chapter considers when and how a modern financial system emerged, how it contributed to economic growth, and what relationship it had to the country's participation in international finance. With some lessons of financial history drawn from the cases in mind, it investigates the finance–growth nexus, and the finance–growth–globalization nexus. After discussing data sources and methodological considerations, econometric results and conclusions are presented. A commentary is also included at the end of the chapter. (pages 373 - 416)
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Core, Periphery, Exchange Rate Regimes, and Globalization - Michael D. Bordo, Marc Flandreau
DOI: 10.7208/chicago/9780226065991.003.0010
[fixed rate, flexible exchange rates, global financial integration, financial maturity, gold standard, financial markets, floating]
The traditional view is that fixed exchange rate regimes are best for the globalization of financial markets. This view is based on the stellar performance of the classical gold standard. Yet today we are in another era of globalization as pervasive as the earlier one, and the dominant regime is floating. This paradox suggests at first glance that globalization, rather than being determined by the exchange rate regime, occurs independent of the exchange rate regime. However, although this may be the case for advanced countries, it is not for emergers, whose regime choice is in large measure driven by international financial integration. This chapter focuses on the different historical regime experiences of the core and the periphery. Section 9.2 sets the stage by considering the evidence on global financial integration from 1880 to 1997, using the well-known Feldstein–Horioka approach. Section 9.3 lays out the financial maturity hypothesis and presents narrative evidence for the pre-1914 period of the different experiences of the core and peripheral countries in adhering to the gold standard. Section 9.4 presents some empirical evidence on the link between financial depth and the exchange rate regime for core (advanced) and peripheral (emerging) countries from 1880–1913 and today. Section 9.5 summarizes the findings and suggests some lessons from history. A commentary is also included at the end of the chapter. (pages 417 - 468)
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Crises in the Global Economy from Tulips to Today - Larry Neal, Marc Weidenmier
DOI: 10.7208/chicago/9780226065991.003.0011
[international crises, financial systems, monetary systems, tulip mania, debt crisis, Barings crisis, Wall Street crash, Asian financial crises]
This chapter examines historical examples of international crises and contagion in chronological sequence, asking in each case (a) what is the evidence for contagion, judged by the standards set by analysts of the crises of the 1990s; and (b) what were the consequences of the crisis for the evolution of financial and monetary systems? The crises considered are the tulip mania of 1637, the Mississippi and South Sea bubbles of 1719–20, the Latin American debt crisis of 1825, the international crisis of 1873, the Barings crisis of 1890, the stock market crises of 1893, the panic of 1907, the Wall Street crashes of 1929 and 1987, and the Asian crises of 1997. A commentary is also included at the end of the chapter. (pages 473 - 510)
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Monetary and Financial Reform in Two Eras of Globalization - Barry Eichengreen, Harold James
DOI: 10.7208/chicago/9780226065991.003.0012
[monetary reform, financial reform, globalization, global trading system]
This chapter reviews the history of successes and failures in international monetary and financial reform in two eras of globalization: the late nineteenth century and the late twentieth century, and in the period in between. The narrative proposes the hypothesis that a consensus on the need for monetary and financial reform is likely to develop when such reform is seen as essential for the defense of the global trading system. A commentary is also included at the end of the chapter. (pages 515 - 544)
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Globalization in Interdisciplinary Perspective - Clive Crook, Gerardo della Paolera, Niall Ferguson, Anne O. Krueger, Ronald Rogowski
DOI: 10.7208/chicago/9780226065991.003.0013
[panel discussion, round table, globalization, Clive Crook, Gerardo della Paolera, Niall Ferguson, Anne O. Krueger, Ronald Rogowski]
This chapter presents a round table on the costs and benefits of globalization, chaired by Peter B. Kenen of Princeton University. Experts from different disciplines were invited to focus their attention on the themes raised by the conference papers in terms of the following questions: What are the benefits? What are the costs? Who wins and who loses? And what does the future look like? The panelists were Clive Crook, an editor of The Economist; Gerardo della Paolera, Rector of Universidad Torcuato di Tella in Buenos Aires; Niall Ferguson, a historian at Jesus College, Oxford; Anne O. Krueger, Deputy Managing Director of the International Monetary Fund; and Ronald Rogowski, a political scientist from the University of California, Los Angeles. (pages 549 - 570)
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Contributors
Author Index
Subject Index
